US TRADE GAP WIDENED IN OCTOBER
Recent Unites States trade data shows the widening of the trade deficit in October which reflects increases in imports of oil and other foreign goods and the slowdown in exports. According to the commerce department, the trade gap in services and foreign goods expanded 8.6% as compared to the previous month which was adjusted to 48.73 billion USD for October. Data showed that the US not only imported more oil as compared with the previous month but also at a higher average price. Strong consumer spending and high consumer confidence also drove imports higher. On the other hand, exports remained unchanged in October. The overall trade deficit has widened to 11.9% so far this year as compared with the same period in 2016.
Later Today, PMI data from the UK fell in November meaning activity in the UK's most profitable service sector eased in November. The service sector which accounts for 80% of the UK's economy fell to 53.8 in November from 55.6 in October. Keep in mind that the 50-point mark separates expansion from contraction. Instead of weaker expansion in the service sector, the latest data indicates that the economy is showing robust growth for the world’s fifth largest economy.
The EUR/USD is expected to trade with a bearish outlook. The pair is trading below its key resistance level at 1.1960 (last week's high), which is expected to limit the upside potential. A bearish cross has been identified between the 20-day moving average and the 50-day moving average. Additionally, the relative strength index lacks upward movement. Therefore, as long as 1.1960 (last week's high) holds on the upside, look for a new decline to 1.1805 and 1.1760. Alternatively, above 1.1960 look towards 1.2010 and 1.2045.
The USD/CAD is under pressure and expected to extend its downside movement. Yesterday's high at 1.2726 is playing a resistance role and is likely to post new weaknesses. Both the 20 and 50 day moving averages are above the prices and should continue to push the prices lower. In which case, as long as 1.2726 is resistance, look for targets 1.2630 and 1.2590. Alternatively, above 1.2726, look for 1.2775 and 1.2805.
The GBP/USD is expected to trade with a bearish outlook below 1.3537 (yesterday's high). The relative strength index is mixed to bearish and below its neutrality area. The 20 day moving average is turning down, confirming a negative outlook. To sum up, as long as 1.3537 is resistance look for 1.3369 (today's low) and 1.3320. Alternatively, above 1.3537 look for 1.3550 (last week's high) and 1.3580.